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Rice University 
Report of the President 

1983 





Rice University 
Report of the President 

1983 



A TRIBUTE TO THE MEMORY OF 

GEORGE R. BROWN 

1898-1983 

FROM HIS ASSOCIATES AT RICE UNIVERSITY 



The Rice Board ot Governors is deeply saddened by the loss of George R. Brown, valuable counselor and 
friend, and extends its sympathy to Alice Brown and the Brown family. 

For four decades Mr. Brown as Board member and as interested partisan of Rice University challenged 
the Board, the administration, the faculty, and the students to find ways of making a better university. Each 
challenge emerged with the spirit ot adventure which typified his work and with which he infused all of his 
projects. 

Through his generous bequest, William Marsh Rice founded an institute tor the advancement of 
literature, science and art, for the instruction of the inhabitants ot Houston and Texas. George Brown 
provided goals and opportunities for the institute to become a university of national and international 
impact while continuing to maintain the careful conversion of talented students into eftective members of 
society. 

Mr. Brown influenced the development ot the University in many ways, some of them, because of his 
own wishes, known only to a few. He should be highly honored for his role in any of the following, since he 
was instrumental in the success of all: the Rincon oil field purchase; the additions of buildings including the 
Fondren Library, Anderson Hall, Abercrombie Engineering Laboratory, Herman Brown Hall, and the 
Space Science Laboratory; the football stadium; the revision ot a conservative investment policy; the $33 
Million Capital Campaign; the revitalization ot the engineering school; the establishment ot three 
residential colleges; the George R. Brown Prizes tor Excellence in Teaching; and the Brown Challenge 
Grants. 

No one has had a greater influence on the de\'elopment ot this University than George R. Brown. His 
ideas and generosity will continue to enrich the li\'es of the students, taculty, and triends, as long as there is 
a Rice University. 

NOW, THEREFORE, BE IT RESOLVED that this resolution be recorded on our minutes and copies 
hereof, properly inscribed and sealed, he delivered to his widow, Alice Pratt Brown, and the family: Nancy 
Brown Negley, Maconda Brown O'Connor, Isabel Brown Wilson, Louisa Stude Sarotim, and M. S. Stude. 



Norman Hackerman 
President 

Charles W. Duncan, jr. 

Chairman 
Josephine E. Ahercromhie 
John L. Cox 
C. M. Hudspeth 



Edward W. Kelley, Jr. 
Ralph S. O'Connor 
Jack T. Trotter 
Judy Ley Allen 
J. Evans Attwell 
James A. Elkins, III 
Catherine C Hannah 



PaulN. Howell 
William F. Kieschnick 
S. I. Morris 
David L. Rooke 
David E. Famsworth 
William M. McCardell 
Taylor Ray 



Rice University Houston, Texas March 24, 1983 



Digitized b]rin^ Internet Archive 

in 2011 wijm, funding from 

LYRASIS JVIembep^aind Sloan Foundation 



http://www.archive.org/details/reportofpres19821983rice 



FROM THE PRESIDENT 



January 13, 1943, George Brtnvn was named trustee ot Rice Institute. He served as 
trustee and trustee-emeritus until his death on January 22, 1983. Thri)ughout these 
forty years he gave generously of his time and his talents tor the betterment of 
Rice. In reviewing his service to Rice, three things stand out in my mmd: 

1. While Mr. Brown was chairman ot the board, Rice Institute, a predomi- 
nantly undergraduate school, changed to Rice University with graduate 
and protessional schools, the college system, and greatly expanded educa- 
tional, athletic and residential facilities. The goal, as defined by the 
Board and aftirmed by the court, was to be a "University ot the hrst class." 

2. George Brown was deeply concerned with teaching — good teaching. He 
established an endowment to give annual awards and recognition to good 
teachers. Today the quality of instruction is one ot the distinguishing 
characteristics of Rice. 

3. George Brown led the first tunding effort for Rice Institute in order to pur- 
chase the Rincon oil tield. Under his direction a de\'elopment office was 
established in 1953. In 1965 he served as chairman ot the first capital 
campaign. In 1976 he announced the "Brown Challenge" as a long term 
incentive-funding effort for Rice. During his years of service, gitts trom 
more than 21,500 alumni, corporations, foundations, and triends were 
received by the University — representing a current value ot more than 
$300 million m plant, endowment, and operating funds. 

Rice today bears the strong imprint ot George R. Brown. So will the Rice ot 
tomorrow. 



Nbmian Hackemian 
President 




"At m\ death, jar value reeeived, I promne to pay. . . jor the 'WiUiam M. Rice Institute jur the advaiieement 
of Literature, Science and Art the sum oj Two Hundred Thousand Dollars. . . That the above sum of Two 
Hundred Thousand Dollars is an Endowment. .." 



W.M. Rice 

Houston, Texas, May 13, 1891 



THE ENDOWMENT 



At its opening in September 1912, Rice offered high quality instruction in "letters, 
science and art" to a select group of students, at no tuition. This was possible only 
because of Rice's endowment, then the largest in the South. Today, due to the 
generosity of alumni and friends and the careful management of its resources. Rice 
University has an endowment that continues to rank among the ten latgest college 
and university endowments in the United States. The income from this endow- 
ment pays for approximately sixty percent ot the instructional costs for each stu- 
dent. The establishment, maintenance, and growth of this endowment represents 
one of the great stories of American philanthropy in education. 

The endowment of Rice University was established by William Marsh Rice in 
1891 with a $200,000 note yielding two and one-halt percent per year payable to 
the Rice Institute upon his death. Mr. Rice subsequently added to the original en- 
dowment by deeding several parcels of real estate to the Institute with the stipula- 
tion that the deeds would not be published until attet his death: Forty-nine 
thousand acres ot pine timber lands in western Louisiana, the Capitol Hotel built 
on the site of the Republic of Texas' 1837 capitol in Houston, and six and one-half 
acres on Louisiana Street designated as the site for the Rice Institute. Combined 
with other real estate and notes assigned to the Institute during Mr. Rice's lifetime, 
these original endowment gifts totaled $3,319,755. 

Aftet Mr. Rice's estate was settled in 1904, apptoximately $3 million was dis- 
tributed to the Institute and added to the endowment as a separate capital fund. By 
the time of the formal opening of the Rice Institute m 1912, the endowment had 
grown to almost $9 million. The majority of the increase was a $1,787,439 addi- 
tion to the original endowment account from the Rice Land Lumber Company, 
which was formed to manage the 49,000 acres in Louisiana. 

For the next 25 years there was little activity in the new company and bv the 
late 1930s, it owed the Institute almost $150,000 as a result ot property taxes and 
other expenses exceeding the revenues that it produced. That pattern was soon to 
be reversed, however. From the 1940s through the ptesent, the main source ot 
income for Rice Land Lumber Company has been oil and gas revenues, including 
royalties, lease rentals, and lease bonuses. As ot June 30, 1983, oil and gas reve- 
nues since 1943 amounted to about $18 million and gross timber sales were approx- 
imately $6 million. More than $21 million has been added to the university's 
endowment ttom Rice Land Lumber Company disttibutions. 

The 1940s were also the beginning of another major source of oil and gas rev- 
enue for Rice University. In 1942, at the urging of County Judge Roy Hofhein: '32 
and George R. Brown '20, Rice's trustees wete persuaded to take advantage of a 
unique opportunity to purchase nearly fifty percent interest in a proven oilfield, 




In the original endowment were 49, 000 acres of timber lands in Loiasidna. most of which are still 
owned by the university. More than $21 million has been added in the unwersny's endowment from 
oil and gas and timber revenues received from these properties. 




Tfit' capitol grounds of the Republic of Tcxai were pdii nj Kill's uri^^indl endoument Founder William jMursh Rict' acquired the property after the depicted 
capital bmldmg (1836-40) icas razed to make ivay for the old Capitol Hotel and also the Rice Hotel, each nj ivhich were owned by the university at various 
intervals. (Photo^aph courtes^' of Houston Public Library. Metropolitan Research Center) 




SOUTH. 
, TEXAS" ■ 

CannERCiAL. 

NATIONAL 
. BANK' 



1//^^ 



IDA?. 






^Af/f ry/'..lxKR-x NiTiftJUii. BitjK A, Trust Co., 

^ ■ UK LA H Of,^ A. C I T Y , OK L A . 



\/ai/ ^f'^ni: 



CASHIER'S CHECK 






Aboi'e, tlie signing ceremony making Rice's pur- 
chase of interest m the Rincon Oil Field. December 
18. 1942. Suinding. left Ui right: A.S. Cleveland, 
Tom Davis. C.A. Dwyer. Palmer Hutcheson, 
John Freeman, James A. Ellcins, Count-v Jiaige 
Ro>' Ho/hem:, A. H. Fulbnight, John Q. 
Weatherly, Harry Hansjen. Seated: James L. 
Shepherd. Jr. , Benjamin Botts Rice, John T. Scott 
... At left, the $ I -million check that paid for 
Rice's Rincon interest and helped launch the en- 
dowment's remarkable growth of the past forty 
years. 



THE ENDOWMENT 




The Rincon Oil Field near the Mexican border has generated almost $45 mdhon oj net incumL', 
$39,200,000 of which has been added [» the unreitricted L'ndoirmL'nt- 

the Rincon field in Starr County, Texas. In one ot its tirst major solicitations ot 
donors, Rice raised $500,000 toward the Rincon purchase. Demtmstrating their 
confidence in the wisdom ot the acquisition ot the Rincon field, the followin.y 
community leaders contrihuted the tirst $200,000: Mr. and Mrs. Herman Brown, 
Mr. and Mrs. George Brown, Mr. and Mrs. Harry Wiess, Mr. and Mrs. Stephen 
Parish, Mr. and Mrs. Will Parish, and Mr. and Mrs. Hugh Roy Cullen. The M. D. 
Anderson Poundation contrihuted $300,000 toward the purchase, and the balance 
of $500,000 ot the down payment was taken from Rice endowment funds. 

The assumed debt from the Rincon purchase was retired by July 1947 using 
net revenues generated by the field, and the net income from the properties, less 
recovery of the asset cost, began to be added to the endowment fund. Pftective July 
1, 1972, the Board of Trustees changed the policy with respect to oil and gas re- 
ceipts (except those from properties of the original endowment) and authorized 
transferring 72.5 percent to current operations and retaining 27.5 percent in the 
endowment fund after the related asset was fully amortized. As ot June 30, 19b3, 
the Rincon properties had generated almost $45 million of net income, of which 
$39.2 million had been added to the unrestricted endowment and $5. 5 million had 
been spent for current operations since 1972. 

The assets derived from Mr. Rice's gifts, other unrestricted endowment gifts, 
and designated portions of oil and gas revenues, constitute the unrestricted endow- 
ment of Rice University. Llnder terms of the will, the corpus ot these funds cannot 
be spent and the income produced by these funds is unrestricted and for the general 
operation of the University. 

Many gifts to the University are restricted by the donor to establish an end(.)w- 
ment that will provide income for a particular purpose. Such endowments fund 
specific scht)larships, fellowships, professorships, instructional programs, and other 
University activities. Examples include the Graham Baker Scholarship, the Class 
of 1929 Scholarship, the Lynette S. Autrey Professorships, the Harry C. and Olga 
Keith Wiess Science and Engineering Fund, and the Shepherd Music School En- 
dowment. As of June 30, 1983, there were 337 restricted and other designated 
endowment funds at Rice having a total market value of approximately $167. 3 
million. The corpus of the restricted funds canniit be spent, and the income must 
be used in accordance with the conditions ot the gifts. 

The annual revenue of the unrestricted current fund that is not spent or allo- 
cated to a specific use, plus certain other transfers approved by the Board of Gover- 
nors, constitute Punds Functioning as Endowment (PPAE). The June 30, 1983 
book value of PPAE is $89.4 million. The corpus of PPAE may be spent upon ap- 
proval of the Board; the income is unrestricted and used for the general operation 
of the University. 



THE ENDOWMENT 



These three funds — the Unrestricted Endowment, the Restricted Endow- 
ment, and Funds Functioning as Endowment — make up the endowment ot Rice 
University. When the stocks, honds, and other assets are valued using the June 30, 
1983, market values, the endowment fund is in excess of $500 million. This en- 
dowment produced income, not including realized capital gains which are added to 
the endowment, of more than $32,750,000 for the year 1982-1983. 



PRIVATE UNIVERSITY ENDOWMENTS 
1982 1973 1963 1953 



Endowments 
by Rank 

1 . Harvard 

2. Princeton 

3. Columbia 

4. Stanford 

5. Yale 

6. M.l.T 

7. Rochester 

8. Chicago 

9. Northwestern 

10. Rice 

11. Cornell 

12. Washington U. 

13. N.Y.U. 

14. Emory 

15. Johns Hopkins 

16. Dartmouth 

17. Pennsylvania 

18. CalTech 

19. Notre Dame 



1943 1933 1923 1913 



$1,711 $1,189 



20. 
21. 
22. 
23. 
24. 



S. California 

Vanderbilt 

Duke 

Case-Western 

Brown 



25. Carnegie- Mellon 



886 
777 
770 
747 
630 
424 
394 
365 
345 
318 
311 
310 
296 
262 
260 
218 
209 
204 
186 
185 
159 
140 
127 
124 



433 
255 
350 
517 
437 
494 
293 
279 
177 
300 
161 
138 
227 
159 
171 
151 
141 
76 
58 
168 
113 
77 
105 
125 



5416 

88 

146 

129 

282 

125 

84 

155 

99 

102 

124 

58 

56 

38 

94 

72 

81 

55 

27 

12 

55 

46 

82 

36 

52 



$216 
55 
111 
44 
147 
41 
60 
75 
70 
44 
50 
35 
21 
23 
42 
30 
36 
28 
8 
2 
32 
20 
31 
15 
30 



il54 
35 
89 
31 
106 
37 
52 
71 
25 
17 
33 
18 
9 
7 
30 
20 
22 
13 
na 
na 
27 
39 
17 
11 
17 



5126 
20 
89 
27 
92 
33 
53 
59 
17 
13 
na 
20 
9 
5 

31 
17 
19 
8 
na 
na 
20 
24 
18 
10 
16 



53 

13 
41 
27 
36 
17 
13 
32 
5 

12 

20 

12 

3 

2 

22 

7 

10 
6 
1 
1 
7 
na 
7 
7 
10 



27 
5 
9 

24 

15 

3 

na 

18 

4 

10 

10 

7 

1 

na 

6 

4 

1 

na 

na 

na 

3 

na 

5 

na 

7 



note; All ot the above sums are rounded off to the nearest million dollars. The 
figures for 1982 and 1973 are taken from the 1981-82 and 1972-73 editions of 
Voluntary Support of Education, prepared annually by the Council for Financial 
Aid to Education. The figures for 1963, 1953, 1943, 1933, 1923, and 1913 are 
from the appropriate annual issues of the World-Telegram World Almanac for 
schools other than Rice. 

At the completion oj its first academic/fiscal year in 1913, Rice estimated /or the editors of the 1914 
World-Telegram World Almanac that its endowment (or "productive funds") stood at $10 mil- 
lion. At the time, this was exceeded only by Harvard, Stanford, Chicago, and Yale endowments (in 
that order) and produced $482,000 income with which to run the nation's newest institution of 
higher learning. In the years since, as noted m the text, tfie Rice eiuiowment has increased steadily 
following a change of investment policies in the 1 940s and the generosity of the university's alumni, 
friends, foundation, and the business community. 



THE J 982-83 ACADEMIC YEAR 



Matriculation ot a record 685 freshmen in August 1982 pushed the enrollment of 
full-time undergraduates to 2,707 and total enrollment to 3,746. Quality did not 
suffer with the increased numbers, which included 172 new National Merit 
Scholars. Rice's 554 merit scholars in all tour classes was third highest in the 
nation behind Harvard/Radclitfe and Princeton. Average SAT scores among 
incoming freshmen was 1,294- 

Construction on campus was continuous, with completion of the Seeley G. 
Mudd Computer Science Building and initiation ot work on Herring Hall for the 
Jesse H. Jones Graduate School ot Administration. 

It was the year ot the British at Rice with visiting lecturers trom England in- 
cluding Prince Phillip to discuss the World Wildlite Fund, Speaker ot Britain's 
House ot Commons George Thomas, distinguished playwright Tom Stoppard, 
former London Times editor and current chaitman of England's Arts Council Sir 
William Rees-Mogg, and former British prime ministet Edward Heath. 

Death claimed several long-time members ot the Rice community during the 
year in addition to former board chairman George Brown. These include former 
trustee John S. Ivy (1951-68), former governor F. Fisher Reynolds (1969-73), Jess 
Neely (football coach and athletic director, 1940-67), William H. Masterson (first 
dean of humanities and first mastet ot Hansren), Michael V. McEnany (totmer 
registrar, 1954-64, and first dean of undergraduate affairs, 1964-73, after hrst com- 
ing to Rice to instruct in electiical engineering in 1943), and William W. Caudill, 
a distinguished architect who was director of the univetsity's school of architecture 
from 1961 to 1969. They all deserve to be remembered by the Rice communitv. 







As academic/fiscal 1982-83 approached its end. the Seeley G. MiuM Computer Science Budding 
was virtualh complete. 



11 



STUDENT STATISTICS FOR 1982-83 



Enrollment (tall 1982) 



Undergraduate 






Humanities/Social Sc 


ences 




Architecture 






Engineering 






Music 






Science 






Dciuhle, Triple, Area 


Vlajors 




Graduate 






Humanities/Scicial Sc 


lences 




Administration/Accounting 




Architecture 






Engineering 






Music 






Science 






Geographic Distrihution 


(fall 1982) 


States 


Students 


Alahama 




25 


Alaska 




7 


Arizona 




14 


Arkansas 




28 


California 




102 


Colorado 




38 


Connecticut 




42 


Delaware 




12 


District of Columhia 




18 


Fkirida 




84 


Georgia 




37 


Hawaii 




6 


Idaho 




4 


Illinois 




90 


Indiana 




29 


k)wa 




9 


Kansas 




32 


Kentucky 




19 


Louisiana 




93 


Maine 




8 


Maryland 




51 


Massachusetts 




60 


Michigan 




32 


Minnesota 




15 


Mississippi 




17 


Missouri 




76 


Montana 




7 


Nebraska 




10 


Nevada 




9 


New Hampshire 




9 


New Jersey 




58 


New Mexico 




48 


New York 




121 


North Carolina 




10 


North Dakota 




1 


Ohio 




77 



Male 


Female 


Total 


2,349 


1,397 


3,746 


1,669 


1,038 


2,707 


363 


359 


722 


78 


47 


125 


561 


190 


751 


33 


45 


78 


363 


210 


573 


271 


187 


458 


680 


359 


1,039 


129 


154 


283 


50 


41 


91 


47 


24 


71 


205 


27 


232 


23 


27 


50 


226 


86 


312 


States 




Students 


Oklahoma 




99 


Oregon 




10 


Pennsylvania 




64 


Rhode Island 




3 


South Carolina 




12 


South Dakota 




7 


Tennessee 




41 


Texas 




1,769 


Utah 




5 


Vermont 




2 


Virginia 




55 


Washington 




20 


West Virginia 




9 


Wisconsin 




23 


Wvoming 




3 


Guam 







Puerto Rico 




5 


Virgin Islands 




1 



Foreign* 

China 

England 

France 

Germany 

India 

Iran 

Japan 

Korea 

Mexico 

Taiwan 

Venezuela 



Students 

16 
12 

9 
16 
31 

8 
13 
13 
21 
33 



*61 countries from which tuir current 
students number seven or less are not 
listed. 



12 



COMMENCEMENT 1983 

DEGREES AWARDED (MAV 10, 1983) 



Bachelor ot Arts 

Bachelor of Science in Chemical Engineering 
Bachelor of Science in Ci\il Engineering 
Bachelor tit Science in Electrical Engineering 
Bachelor of Science in Materials Science 
Bachelor ot Science in Mechanical Engineering 
Bachelor of Fine Arts 
Bachelor of Architecture 
Bachelor ot Music 
Master's Degrees 
Doctoral Degrees 
Totals 



Male 


Female 


Total 


251 


195 


446 


26 


11 


37 


12 


5 


17 


61 


14 


75 


3 


2 


5 


22 


6 


28 





1 


1 


11 


3 


14 


2 


6 


8 


139 


84 


22 3 


46 


25 


71 



573 



i:>l 



925 




13 



AUDITORS' REPORT 

TO THE BOARD OF GOVERNORS. 
WILLIAM MARSH RICE UNIVERSITY: 

We have examined the balance sheet of William Marsh Rice University 
(a nonprofit Texas corporation) as ot June 30, 1983, and the related statements of 
changes in fund balances and current funds revenues, expenditures and other 
changes for the year then ended. Our examination was made in accordance with 
generally accepted auditing standards and, accordingly, included such tests ot the 
accounting records and such other auditing procedures as we considered necessary 
in the circumstances. 

In our opinion, the accompanying financial statements present fairly the finan- 
cial position ot William Marsh Rice University as of June 30, 1983, and the 
changes in fund balances and the current funds revenues, expenditures and other 
changes for the year then ended, in conformity with generally accepted accounting 
principles applied on a consistent basis. 

ARTHUR ANDERSEN & CO. 
Houston, Texas 
September 30, 1983 



14 



BALANCE SHEET 

]L\'E30. 1983. WITH COMPAHATIVE TOTALS AT ]U\'E 30. 1982 

DOLLARS /.\' THOUSAVDS 



June^C. I9S3 



ASSETS 

Cash, Receivables and Other Assets: 

Cash 

Accounts receivable 

Loans, net of allowance for doubtful accounts of 

S484in 1983andS4S6in 1982 
Other assets 

Investments (Note 3): 

Marketable securities, quoted market of 5488,843 

in 1983 and 5333,487 in 1982 
Developed real estate, less accumulated amortiration 

of 55,770 in 1983 and 55,607 m 1982 
Undeveloped real estate 
Mortgage and collateral loans 
^XTiollv owned corporations, at underlving 

equit\- (Note 4) 
Oil and gas properties, less accumulated amortization 

of 529. 102 in 1983 and 1982 
Interest-bearing endowment hind advances (Note SI 

Interfund Receivable (Pavahle), noninteresi-bearing 

Educational Plant, at cost: 
Land 

Buildings and improvements 
Equipment, furniture and libran- books 
Construction in progress 

Less — Allowance tor amortization on auxiliarv and 
educational service facilities 

Total assets 

LIABILITIES .AND FLTND BALANCES 
Liabilities: 

Accounts payable 

Deferred income and deposits 

Deposits of collateral for securities loaned (Note 5) 

Retirement funds (Note 6) 

Other accrued liabilities 

Total liabilities 

Commitments and Contingencies (Note 9) 
Fund Balances: 

U.S. Government and private grants refundable 
Universit\- funds — 

Unrestricted 

Internally designated 

Restricted 

Income unrestricted endowment 

Income restricted endowment 

Unrestricted funds functioning as endowment 

Restricted funds functioning as endowment 

Unexpended plant funds 

Net investment in plant 

Total fund balances 

Total liabilities and fund balances 



Funis Similar Funds 



5 500 5 — 

582 2.7 



604 



301 



(2291 



13.456 



(158) 



288 



1,686 3,065 



320.911 

3.371 
5.040 
3.971 

1.242 

3 

16.50S 

351.046 
lis. 3261 



— 




— 


515, ;;4 


5i 


^^.7S5 


5 2.926 


5 


6.644 


718 




56 


— 




5.907 


— 




654 


— 


- 


2SS 


3.644 


1x54-5 



Plant Funds Lcian Funds 



(10.626 ) 

(10.626 ) 

3.9S4 



341 

80,503 

34,908 

1,825 

117.577 



6 


^43 


110 


734 


5 1 04 


092 



4,305 


— 


— 


1,978 


— 


— 


5,445 


— 


— 


— 


141,764 


— 


— 


71,854 


— 


— 


89,405 


— 


— 


19,213 


— 


— 


— 


3,984 


— 


— 


100.1 OS 


11,570 


322,236 


104.092 


515,214 


5335,755 


5104.092 



8.512 



(5.653) 


(5.636) 


SS6 



3.7t^4 



2,849 



913 



3.762 
3.764 



Total 



321,229 



117.57; 



6.543 



2.691 



]une3C. I9S2. 
Toud 



S 500 


5 


391 


3,359 




3,745 


8,512 




7,530 


894 




7S4 


13,265 




12.450 



267,796 



3,371 


4,702 


5,040 


5,677 


3,971 


2,089 


1,242 


1,118 


3 


3 


— 


— 


334,856 


251,355 


— 


— 


341 


341 


80,503 


74,699 


34,908 


32,451 


1.S25 


638 



105.129 



5.401 



110.734 


102,728 


545S.S55 


5396,563 


5 9.572 


S 6.750 


774 


854 


5,907 


1.894 


654 


803 


288 


314 


17.195 


10,615 



3.503 



4,305 


4,305 


1,978 


983 


6,358 


5.912 


141,764 


118,766 


71,854 


66,715 


89,405 


77,205 


19,213 


16,683 


3,984 


697 


100,108 


91,179 


441,660 


3S5.94S 


S45S.855 


5396,563 



See notes to financial statements. 



15 



STATEMENT OF CHANGES /N EL/ND BALANCES 
FOR THE YEAR ENDED JUNE 30, 1983 
DOLLARS IN THOUSANDS 

Current FuikLs 



hucrnalh 
L'TiR'sInctc'J Desi^ititL'ci 



Revenues and Other Additions: 
Unrestricted current tund revenues 
Revenues and other additions oi 
other funds — 
Grants and contracts 
Gifts and bequests 
Receipts from investments — 
Restricted income 
Realued gains 
Oil and gas royalties 
Distributions from wholly owned 

corporations (Note 4) 
Distribution of income from assets 

held by Rice Trust Inc. 
Additions to investment in plant — 
Direct expenditures (including 
$2,718 charged to current 
funds expenditures) 
Repayment of advances from 
endowment funds 
Interest on loans receivable 
Othet 

Total revenues and cither additions 

Expenditures and Other Deductions: 

Educational and general 

expenditures 
Auxiliary enterprise expenditures 
Indirect costs recovered 
Refunded to grantors 
Expended for plant facilities 
Repayment of advances from 

endowment funds 
Interest on endowment fund 

advances 
Amortization of auxiliary and 

educational service facilities 
Retirement of plant assets 
Loan cancellations and 

collection costs 

Total expenditures and other 
deductions 

Transfers among Funds — Additions 
(Deductions): 

Mandatory — 

Undesignated gifts (Note 2) 

Provision for plant improvements 
(Note 7) 
Funding of unrestricted current 

expenditures for equipment 
Funding of principal and interest 

payments for plant additions 
Other voluntary transfers, net 

Total transfers 

Net Increase (Decrease) for 
the Year 

Fund Balance at Beginning of Year 

Fund Balance at End of Year 

See notes to financial statements. 



$56,842 



$2,709 



56,842 



48,701 



2,709 



2,495 



Endou'ment and 
SimiLir Funds 



PUint Funds 



FwKUnnmg /Tuestmcnc 

Rc'striclcd Endiiicment as End(JU'men[ Uncvpcnded m PLmt Loan Funds 



3,885 


7,208 


— 


6,503 


5,940 


__ 


1,887 


128 


— 


14,774 


9,678 


— 


— 


2,583 


— 


— 



134 



197 



(118) 



22,918 27,915 



38,240 


2,319 


19,645 


10,461 


176 


454 


— 


— 


2.770 





— 


3 



1,123 4,804 

— 1,441 

V 

— 753 



22,872 



,123 



6,998 



454 



8,645 
1,441 



11,565 6,765 10,540 



1,441 
162 



1,603 



137 
64 



598 



799 



531 



540 



(41) 


— 


— 


41 


— 


— 


— 


— 


(2,707) 


— 


— 


— 


2,707 


— 


— 


— 


1,464 


— 




— 


(1,464) 


— 


— 


— 


(2,194) 














2,194 


— 


— 


(4,663) 


781 
781 

995 


(671) 
(671) 

(625) 


181 
222 

28,137 


3,045 
4,288 

14,730 


1,326 
3,520 

3.287 


(8) 

(8) 

8.929 


— 


(8,141) 


— 




259 


4,305 


983 


5,912 


185,481 


93,888 


697 


91,179 


3,503 


$ 4,305 


$1,978 


$ 5,287 


$213,618 


$108,618 


$3,984 


$100,108 


$3,762 



16 



STATEMENT OF CURRENT FUNDS REVENUES, 
EXPENDITURES AND OTHER CHANGES 
FOR THE YEAR ENDED JUNE 30. 1983, 
WITH COMPARATIVE TOTALS FOR 1982 
DOLLARS IN THOUSANDS 



Revenues: 

Educational and general — 
Endowment income (Note 3) 
Student tuition and fees 
Government grants and cimtracts 
Gifts and private grants 

Sales and services ot educational and service departments 
Other sources 

Total educational and general 
Auxiliar\' enterprises 

Total revenues 

Expenditures and Mandatory Transfers: 
Educational and general — 

Instruction and departmental research 

Sponsored research 

Other sponsored programs 

Library 

Student aid 

Student services 

Operation and maintenance of plant 

General administration 

General institutional 

Educational and general expenditures 
Auxiliarv" enterprise expenditures 

Total expenditures 
Mandator^' transfers — 
Undesignated gifts 
Provision for plant improvements (Note 7) 

Total expenditures and mandaron' transfers 

Revenues over Expenditures and Mandatory Transfers 

Other Transfers and Additions (Deductions): 

Amount of restricted receipts (.iver transfers to re\'enues 
Funding of unrestricted current expenditures for equipment 
Funding of principal and interest payments for plant additions 
Refunded to grantors 
Other voluntary transfers, net 

Net other transfers and .idditions (deductions) 

Net increase (decrease) in fund balances 





tear cndea^imt 


11.', ivni 




Year Etukd 




Intcrnalh 






j.me30, 1982, 


UuTe^trwtcd 


Dcsiiniatcil 


Rcsmctcd 


T)lal 


Tnld 


$26,828 


$ — 


$ 5,940 


S32,768 


$28,332 


12,086 


1,449 


— 


13,535 


11,451 


2,111 


— 


7,084 


9,195 


8,505 


3,223 


— 


6,438 


9,661 


7,627 


1,413 


895 


169 


2,477 


2,665 


162 


61 


14 


237 


213 



45,823 
11,019 

56,842 



16,260 



2,405 
304 

2,709 



1,862 



2,676 


330 


4,945 


— 


1,754 


76 


6,933 


— 


3,717 


15 


1,955 


36 


38,240 


2,319 


10,461 


176 


48,701 


2,495 


41 


_ 


2,707 


— 


51,449 


2,4*^5 


5,3^3 


214 


1,464 


— 


(2,194) 


— 


(4,663) 


781 


(5,393) 


781 


$ — 


$ 995 



19,(545 

454 

20,099 



20,09^ 



20,099 



67,873 
11,777 

79,650 



19,645 60,204 
454 11,091 

71,295 



41 
2,707 

74,043 

5,607 



58,793 
10,562 

69,355 



6,070 


24,192 


21,339 


10,224 


10,224 


8,442 


1,320 


1,320 


1,136 


206 


3,212 


2,955 


1,468 


6,413 


5,652 


40 


1,870 


1,603 


209 


7,142 


5,707 


66 


3,798 


3,388 


42 


2,033 


1,863 



52,085 
10,503 

62,588 

237 
2,336 

65,161 

4,194 



49 


49 


2,220 


— 


1,464 


1,519 


— 


(2,194) 


(1,361) 


(3) 


(3) 


(85) 


(671) 


(4,553) 


(5.244) 



(625) (5,237) 



$ (625) i 370 



(2.951 ) 
$ 1,243 



See notes to financial statements. 



17 



NOTES TO FINANCIAL STATEMENTS 
JUNE 30. 1983 



( 1 ) Summary of significant accounting policies — 
Basis of accounting — 

The financial statements of William Matsh Rice University (the 
University) have been prepared in accordance with generally ac- 
cepted accounting principles for colleges and universities. Accord- 
ingly, the financial statements have been prepared on the accrual 
basis of accounting except tor depreciation of educational plant 
facilities, as explained below. Limitations and restrictions placed 
on the use of available resources are recognized in the financial 
statements through the use of fund accounting. Fund accounting is 
a procedure by which resources are classified for accounting and 
reporting purposes into separate funds in accordance with specified 
objectives or activities. Funds having similar characteristics to- 
gether with all related financial transactions have been combined 
into fund groups in the accompanying financial statements. 

The financial information shown tor 1982 in the accompanying 
financial statements is included to provide a basis for comparison 
with 1983 and presents summarized totals only. 

Current funds — 

The statement of current funds revenues, expenditures and other 
changes is a statement of financial activities of current funds 
related to the current reporting period. It does not purport to 
present the net income or loss tor the period as would a statement ot 
income or a statement of revenues and expenses. 

The unrestricted current fund is used to account for those trans- 
actions related to the University's operating budget as approved by 
the board of governors and for certain resources which have been 
designated for specific purposes by the University administration. 
These latter items are presented under the internally designated 
caption. With the exception of the internally designated fund 
balance, it is the policy of the board of governors to transfer any net 
increase In the unrestricted current fund balance for the year to 
unrestricted funds functioning as endowment. 

The restricted current fund is used to account tor funds expended 
for current t)perations but restricted by donors or othct external 
sources for specific purposes. Restricted current tund receipts are 
reported as revenues when expended. 

Current funds used to purchase equipment are accounted for as 
expenditures ot the current funds. Equipment expenditures of the 
unrestricted current fund are funded by a transfer from unrestricted 
funds functioning as endowment (Note 7). 

Endowment and similar funds — 

Endowment funds are generally subject to the restrictions ot gift 
instruments requiring that the principal be invested and only the 
income be expended. Gains and losses arising from the disposition 
of the investments are accounted for as changes in principal. 
Endowment funds are either income restricted or income unre- 
stricted as stipulated by the donor. Investment income from in- 
come restricted endowments may be expended only tor the purpose 
specified by the donor; unrestricted endowment income may be 
expended tor any purpose approved by the hoard of governors. 

The board of governors has designated certain restricted and 
unrestricted funds to function as endowment funds. Restricted 
funds functioning as endowment are comprised of (1) restricted 
current gifts transferred to this fund by the board of governors and 

(2) any excess of restticted Investment Income over current ex- 
penditures. The principal of these funds may be expended, but only 
In accordance with the original specifications of the donor. Invest- 
ment income from these funds Is also subject to the same restric- 
tions as the original gifts. The principal of unrestricted funds 
functioning as endowment is spendable at the discretion of the 
board of governors. 



Generally, income from unrestricted endowment and similar 
funds IS reported as revenue of the unrestricted current tund, and 
income from restricted endowment and similar funds Is reported in 
the fund to which It is restricted. However, investment income 
from developed real estate and oil and gas properties equal to 
amortization of the properties is retained In the endowment funds 
tor the purpose ot asset recovery. In addition, 27-1/2 percent of the 
net receipts from oil and gas royalties are retained in the income 
unrestricted endowment tund after the related properties are fully 
amortized. 

Plant funds — 

Plant funds consist of the total invested in the educational plant 
together with unexpended gifts, grants, income and administra- 
tively designated funds which are held for acquisition, replacement 
or construction of physical properties. The educational plant Is 
stated at cost for purchased assets and fair market value at the date 
ot donation in the case of gifts. Auxiliary and educational service 
facilities financed with advances from endowment funds are depre- 
ciated over their estimated useful lives. Although no other educa- 
tional plant assets are depreciated, it is the University's policy to 
retire capitalized equipment at the rate of 6-2/3 percent per year. 

Loan funds — 

Loan funds include ( 1 ) gifts and grants which are limited by donors 
to the purpose ot making loans to students or faculty, (2) the 
National Direct Student Loan Program financed primarily by the 
federal government and administered by the University and (3) 
advances to the loan funds from unrestricted funds functioning as 
endowment. 



(2) Gifts and bequests — 

It is the policy of the University to include gifts as revenues or 
additions to the appropriate fund balances only when received. 
Gifts and bequests without any designated obligatory use are re- 
quired to be added to endowment, according to a legal interpreta- 
tion of the University's charter. These gifts are recorded as 
revenues of the unrestricted current fund and as mandatory trans- 
fers to the endowment funds. 

Pledges outstanding at June 30, 1983, which will be recorded as 
revenues upon receipt ot the gifts, are as follows; 



Current funds- 
Unrestricted 
Restricted 

Total current funds 

Loan fund 

Plant and endowment funds 

Total pledges 



$ 11,000 
86,000 

97,000 

150,000 
7,706,000 

$7,953,000 



Rice Trust Inc., a corporation wholly owned by the University, 
holds and administers assets, primarily marketable securities and 
mortgage loans (market value of $15,779,000 at June iO. 1983) 
and real estate (market value of $4,546,000 at April 1973, date of 
most recent appraisal) tor various trusts. These assets are subject to 
the lite Income Interests ot certain beneficiaries, several of whom 
are minors. The amount and timing ot the ultimate distribution to 
the University of Its remainder Interest is therefore not determin- 
able, and the assets are not recorded in the accompanying financial 
statements. 



18 



(3) Investments — 

Investments ate recorded at cost at date ot acquisition or fair 
market value at date of donation in the case of gifts, except for 
donated interests in certain undeveloped real estate which were 
recorded at nominal values and investments in wholly owned 
corporations (Note 4). Taxes and maintenance on these donated 
real estate interests (accumulated costs of approximately $847,000 
at June 30, 1983) have been capitalized, subsequent to the date ot 
donation. 

Most income restricted endowment funds, restricted funds tunc- 
tioninf^ as endowment and some unrestricted funds functioning as 
endowment participate in a common investment pool which is 
operated on a market value basis. Those income restricted funds 
which by the terms of the gifts may not participate m such a pool 
are maintained on a separate investment basis. Other endowment 
funds are commingled for investment purposes in the general in- 
vestment pool for unrestricted funds. 

The University recorded approximately $25,188,000 in in\'est- 
ment income from marketable securities in fiscal 1983. Income 
from oil and gas properties recognized as endowment income in the 
current funds was $7,326,000 m 1983. Realized gains in endow- 
ment and similar funds in 1983 were $19,329,000 from markerable 
securities (using the average-cost method) and $5,166,000 from 
the sale of other investments. 



(4) Investments in wholly owned corporations — 

The financial statements include all assets, liabilities and fund 
balances of the University except those of certain separately incor- 
porated but related entities for which the University is fiscally 
responsible. These corporations are included in the endowment 
funds at underlying equity. In 1983, these corporations distributed 
approximately $3,468,000 ti> the unrestricted endowment fund 
and $69,000 to the unrestricted current fund. 



(7) Provisions for plant improvements — 

As a provision for plant improvements, a transfer equal to 10 
percent of unrestricted endowment income has been made from 
unrestricted current funds to unrestricted funds functioning as 
endowment. The portion of the unrestricted funds functioning as 
endowment fund balance that applies to this provision is 
$4, 135,000 at June 30, 1983. 



(8) Interest-bearing endowment fund advances — 

Certain capital prt)jects, major maintenance projects for auxiliary 
enterprises and student loans are funded with interest-bearing 
advances horn unrestricted funds functioning as endowment. The 
advances tor capital and major maintenance projects hear interest 
at rates from 4 percent to 19 percent. The interest received on 
student loans financed by these endowment fund advances is repaid 
to the endowment funds. 



(9) Commitments and contingencies — 

There are several suits and claims pending against the University, 
the effect ot which cannot be estimated at this time; however, 
officials ot the University and legal counsel believe that the ulti- 
mate liability, if any, will not be material to the University's 
financial position. 

The University was committed under contracts at June 30, 1 983 , 
for capital improvements of approximately $7,518,000 to be fi- 
nanced primarily from funds functioning as endowment and gifts. 
Commitments of $888,000 m the untestncted current fund and 
$598,000 in the restricted current fund were outstanding at June 
30, 1983. 



(5) Deposits of collateral for securities loaned — 

The University recei\'es collateral deposits for certain securities 
temporarily loaned to brokers. As of June 30, 1983, the securities 
on loan had aggregate market values of $5,967,000 ($2,686,000 at 
cost) and the collateral deposits of $5,907,000 were invested in 
commercial paper. 



(6) Retirement plans — 

Substantially all employees are eligible to participate in a defined 
contribution retirement plan which is administered by an outside 
agency. The University's contributions to the plan of $1,546,000 
in 1983 were recorded as expenditures of the unrestricted current 
fund. The contributions of the University and the plan partici- 
pants, who are fully vested, are applied to individual annuities 
issued to each participant. 

The University also has a defined benefit retirement plan admin- 
istered by the same outside agency covering participants who began 
receiving retirement benefits prior to July 1, 1976, and certain 
other employees. The University's contributions to this plan were 
$295,000 in 1983, which includes amortization over a 10-year 
period of prior service costs and certain guaranteed minimum 
benefits. As of the most recent benefit information date, June 30, 
1983, the actuarially computed value of vested benefits of 
$1,461,000 was exceeded by the sum of the plan's assets and the 
recorded liability by $65,000. The assumed rate of return used in 
determining the actuarial present values of vested plan benefits was 
7 percent. 



19 



ADMINISTRATION 
SEPTEMBER I. J 983 



BOARD OF GOVERNORS 
SEPTEMBER I. 1983 



Norman Hackerman 
President 

William E. Gordon 
Provost and Vice-President 

William W. Akers 
Vice-President for 
Administration 

John L. Margrave 
Vice-President tor 
Advanced Studies and 
Research 

Ronald F. Stebhings 
Dean ot Undergraduate 
Affairs 

J. David Heliums 
Dean of the George R. 
Brown School of Engineering 

O. Jack Mitchell 
Dean of the School ot 
Architecture 

G. King Walters 
Dean ot the Wiess Scht)ol 
of Natural Sciences 

Larry James Livingston 
Dean of the Shepherd 
School of Music 

Allen J. Matusow 
Dean ot the School of 
Humanities 

Francis D. Tuggle 

Dean ot the Jesse H. Jones 
Graduate School ot 
Administration 

Joseph Cooper 
Dean of the School ot 
Social Sciences 

Joseph Nalle 

Treasurer-Secretary 

D. D. Lovell 

Assistant Secretary 

Scott W. Wise 

Comptroller 



20 



TRUSTEES 

Charles W. Duncan, Jr. 
Chairman of Rice 
Board of Governors 
President, Warren-King 
Companies 

Josephine E. Ahercrombie 
Vice-chairman ot Rice 
Board of Governors 
Director, J. S. Abercromhie 
Mineral Company 

John L. Cox 

Oil Operator 

C. M. Hudspeth 

Law Partner, Delange, 
Hudspeth, Pitman 
and Kat: 

Edward W. Kelley, Jr. 
Chairman 

Investment Advisors, 
Incorporated 

Ralph S. O'Connor 

President, Highland 
Resources, Incorporated 

Jack T. Trotter 
Investments 

TERM MEMBERS 
Judy Ley Allen 

Investments 

J. Evans Attwell 
Managing Partner, 
Vinson and Elkins 

James A. Elkins III 

Assistant Vice President, 
First City National Bank 

James W. Glanville 

Partner, hazard Freres & Co. 

Catherine C. Hannah 
PaulN. Howell 

Chairman of the Board, 
Howell Corporation 

William F. Kieschnick 
President and Chief 
Executive Officer, 
Atlantic Richfield 
Company 

David L. Rooke 
Executive Vice-President, 
Dow Chemical Company 

ALL/MNJ GOVERNORS 

David E. Farnsworth 
President (retired), 
Eddy Refining Company 

Neal T. Lacey, Jr. 

Partner 
PLM Design 

William M. McCardell 
President (retired) 
Exxon Minerals 

Louis D. Spaw, Jr. 
President, Spaw-Glass, 
Incorporated 



TRUSTEES EMERITI 

Herbert Allen 
Chairman of the Board 
(retired), Cameron Iron 
Works 

E. D. Butcher 

President (retired), 
American Commercial 
Lines, Incorporated 

Harry J. Chavanne 
Banker and Investor, 
Chavanne Enterprises 

Oveta Culp Hobby 

Chairman ot the Executive 

Committee 

H.&C. Communications, 

Incorporated 

W. A. Kirkland 
Chairman ot the Board 
(retired), First City 
National Bank 

Theodore N . Law 
Chairman of the Bo.ird, 
Falcon Seaboard 
Drilling Company 

H. Malcolm Lovett 

Partner, Baker and Botts 
James U. Teague 

Retired 

GOVERNOR ADV/SORS 

Richard A. Chapman 
Senior Member, Technical 
Staff, Texas Instruments, 
Incorporated ^ 

John W. Cox 
President and Director 
(retired), General Package 
Corporation and Automatic 
Canteen Company ot 
America 

William S. Parish 111 
President, W. S. Parish and 
Company 

James W. Hargrove 
Financial Consultant 

Gerald D. Hines 

President, Gerald Hines 
Interests 

Carl lUig 

Attorney 

Mary E. Johnston 

Board of Editors, 

Fortune Magazine 

Jack S. Josey 
President 
Lenoir M. Josey, 
Incorporated 



Howard B. Keck 

Chairman of the Board 
(retired), Superior Oil 
Company 

Bame P. Kerr 
President, Pennzoil 
Company 

Wendel D. Ley 

Investments 

J. Hugh Liedtke 
Chairman of the Board 
Pennzoil Company 

J. W. McLean 

Chairman, Liberty National 
Bank and Trust 

James R. Meyers 
Chief, Energy Division, 
Office of Texas 
Attorney General 

Stanley C. Moore 
Chairman Emeritus, Smith 
International, Incorporated 

S. 1. Morris 
Partner, Morris/Aubry 
Architects 

Walter D. Murphy 
Senior Vice President, 
HCB Contractors 

Ralph W. Noble 
President, Milchem, 
Incorporated 

Haylett O'Neill, Jr. 

Exxon (retired) 

J. Howard Rambin 
Chairman of the Board 
(retired), Texaco 
Incorporated 

Taylor Ray 
Rancher 

Frank B. Ryan 

Director ot Athletics, 
Yale University 

John D. Simpson 
Chairman of the Board 
(retired), Superior Dairies 

Harry K. Smith 
Chairman ot the Board, 
Big Three Industries 

Karl C. ten Brink 
General Manager (retired), 
Texaco, Incorporated 

Talbott Wilson 
Architect, Talbott 
Wilson/ Associates 

James O. Winston, Jr. 
Former Director, Rowles, 
Winston and Company 

Benjamin N. Woodson 
Chairman of the Board 
(retired), American 
General Companies 

Helen S. Worden 



I 



miigjg 



id